Will McDonald's Wi-Fi the Floor with Starbucks?

For more than a decade, Seattle has prided itself on its robust economy and unmatched blend of innovative, successful companies. We’ve had it all. So it’s particularly hard to see a local, homemade Seattle company get whacked and weakened by punch after punch from its competitors.

Starbucks [SBUX] is having a rough recession. They’ve had to close hundreds of stores due to declining sales and have seen their market share shrunk by the likes of McDonald’s and Dunkin’ Donuts.  

Today, they’ve taken another smack to the gut from the boys behind the Golden Arches. Starting in January, McDonald’s will be offering free Wi-Fi. What this means is that the company behind the guy in the clown outfit has out flanked Starbucks yet again and gone directly to consumers with something they want and, frankly, demand.

For years Starbucks has stubbornly stuck to the notion that people like their stores and products so much that they will pay for an Internet connection they can find for free at a local café down the street (or now at a fast food chain with much cheaper lattés). In all fairness, Starbucks does offer free Wi-Fi, but only to AT&T Internet subscribers, or if you have a Starbucks card--otherwise, you pay for your time.

This might have made sense four years ago when wireless Internet first made its move towards ubiquity. But the world has changed and customers demand access as a prerequisite for settling down with a hot cup of Joe.   

Everyone else, it seems, has recognized that having people stay in your store and probably buy more than one drink, a donut, juice, or a Happy Meal is a very good thing. They probably realize that the income they generate from those incremental sales will pay for the cost the store incurs from an Internet connection.

The bitter irony, pun intended, is that Starbucks invented the concept of the coffee-house-as-office. They created the idea of a comfortable, cozy place to have an espresso and get a little something done. One could argue that the rapid rise of 3G phones is a direct response to people wanting tools that would allow them to be productive while sitting in someplace very much like Starbucks.  

From the mid-1970s until just a few years ago, Starbucks made a series of game-changing innovations that radically shifted the way we think about coffee and the standards we expect when we press our lips to a steaming hot beverage. But that magic has seemingly run dry. Their response to a crushing depression has been to dilute their brand by changing their stores into clones of indie coffee houses and by creating an instant coffee which is exactly the type of coffee experience Starbucks was created to replace.  

So Starbucks is on the mat and dazed like Rocky versus Apollo Creed and those of us that care about the company, and the future of our local economy, are standing at ringside and screaming like Mickey in hopes that Starbucks will somehow rise up and beat the crap out of the clowns that are trying to steal its lunch.